Intel outlook clouded by weak demand, analyst says

SAN JOSE, Calif. – Despite Intel’s reports of progress in tablets and smartphones at the Consumer Electronics Show this week, at least one analyst remains bearish on the x86 giant’s outlook.

Atmel, on the other hand, is expected to reap gains from increasing use of touchscreens in mainstream laptops.

Intel announced at CES new smartphone wins for its Atom-based Medfield platform including a sub-$200 smartphone from China’s ZTE. It also said it will ship a 7W Ivy Bridge processor for low power Ultrabooks and drive the prices down to $599 by the end of 2013. In addition, Intel talked about a 1.2-GHz Atom Z2420 for mobile systems selling for less than $20.

But "positives at CES are offset by continuing weak PC demand and escalating tablet cannibalization concerns," wrote Bobby Burleson, a financial analyst with Canaccord Genuity in a report issued Wednesday (Jan. 9).

“We also believe Intel's bulkier Core-based tablets on display will have a tough time finding a niche, given new Ultrabooks are universally touch-enabled (many with convertible feature) and these expensive Core tablets have a shorter battery life and are costly,” he added.

The Wall Street analyst maintains a hold on Intel stock. He did not change his estimates that Intel will report revenue for the last quarter of 2012 of $13.6 billion, estimating Intel’s revenues in 2012 and 2013 will be $53.464 billion and $54.86 billion, respectively.

“As Intel derives approximately 90 percent of its revenues from the PC market, any material slowdown in PC unit growth could impact the company's revenues and profitability,” Burleson predicted. “In addition, declining production volumes at Intel's internal factories could negatively impact gross margins, as could adverse pricing conditions driven by aggressive competitors in the processor and chip set space,” he added.

Intel will rely on continuing demand for Ultrabooks.

Atmel, on the other hand, stands to reap significant growth with the adoption of its controllers for touchscreens in notebooks. “The mandatory touch requirement for fourth generation Ultrabooks is a positive for Atmel with its 60 percent share of [controllers for] touch-enabled Ultrabooks,” he said. “We do see the ubiquity of touch in the Intel booth [at CES] as positive for Atmel, given Atmel's high share of Win 8 design wins, pointing to strong growth in computing from a near zero base in 2012,” he added.

@ DCH, would life be more meaningful if the money for tablet is saved and donated to charity, or to help the needing, or to give away the money to your children for a field trip? At the end, your iPad is nice to have, in fact, if you really need the function of iPad, you can save a lot of real money by going for the alternate Nexus 10 which has higher ppi or the Surface RT with uSD support and a start-of-the-art OS (relative to the iOS). The argument of more apps is really mood because your life will not diminish without those, right? With the new crop of Win8-based tablet and the upcoming $599 (if OEM can make this price point at ECY2013), iPad is so very throwing money into drain because of the 2nd-rated hardware features (no USB port, proprietary charging and accessories port, no uSD support, OS with limited function and good only for single-purpose apps, ...) especially for consumers who have engineering mindset.

@iniewski: someone has to say 'the emperor has no clothes'. That is NOT to say that Intel will remain the winner, but that tablets are not replacing laptops-desktops, but a large segment of the 'casual' market. Perhaps at some point they will intrude into the smartphone market.

Intel sales into smart phones, tablets, TV, smart signage are still low experimental volumes, although volume ramp is expected by this analyst to be much greater than many anticipate into Haswell derivative generation.
For 2012 through 2013 end, Intel manufactured approximately 24,882,339 Atom’s of all grades with review sources stating Pennfield/Medfield SOC phone operating power 18 mW to 1W. And for Tablet 2W idle to 4W active. Centerton Server SOC TDP 6.1 to 8.5w is aimed for 5w Duals at next generation Avoton, where industry sources suggest public power disclosure is an Intel disinformation overstated by 20%.
In addition for the Android/Chrome OS market, Intel has manufactured approximately 7,387,206 Celeron 7xx/8xx Series, average price $102, TDP 17w for systems that don’t need batteries because they have a power supply.
This analyst believes for open integration market, sans vertically integrated consumer electronics producers who fabricate their own ARM designs, Intel will be unstoppable in TV on the ability to supply good enough processor performance on the monopoly advantage of their price for dice area less than whole production cost.
Finally Intel is in the process of dumping a combination 16,714,451 Sandy Bride Celeron Value Desktop and Value Mobile TDP 35w and 17W respectively for prices substantially less than Intel variable and fixed cost which is a continuin antitrust violation; $50 and $86 respectively.
At these prices for CPU/GPU combos including provided at no cost in a bundled sales package, for COM in tethered systems Intel is systematically disabling ARM in its established industrial and commercial niches and surrounding ARM in its mobile stronghold.
Ivy Bridge dumping begins Q1 2013 with Celeron and Pentium brands continuing to displace competitive processors on Intel monopoly advantages. And where there is an actual cash sale, displaces channel financial ability to purchase anything else.
Mike Bruzzone
Camp Marketing

I do lots on my iPad including commenting on EE Times articles. I do not need flash since there are aps for all the major content providers such as CNN.
The big differentiator is the tablet is for content consumption and the notebook or desktop is for content creation.

So Far the IBM computer model is valid
Big Server Network (Internet)
many clients
the problem is with improving capabilities of Server & higher speed network
the clients needs are lower every day
Also Clients needs mobility (RF rampup)
low power (battery weigth)
Low cost . Here there is a potential issue with Intel fab cost model
Strength of Intel was also Windows , but this is changing fast
Hope this remarkable company will find a way to keep leardership
but it will be not easy

Agreed. My wife and I like our iPad. It has its niche in our lifes. Its purchase likely did replace a laptop purchase.
But here's the thing: we have no reason whatsoever to buy another tablet soon. The next thing? To replace her older laptop. Then eventually my less old one. Perhaps the cycle will repeat from there.

I think people overestimate growth of the tablet market...sure it is cute...however once you get over novelty factor there is nothing serious you can do with it...in addition my iPad half of the time can't display things (due to Flash embedded on Internet everywhere)...so laptops will remain the main vehicle for working, Intel will be OK